T argetM arketAnalysis CharlevoixCounty M ichigan THEM ARKET STRATEGY N ovember3,2014 P reparedfor: P reparedby: Acknowledgements M ichiganS tateHousingDevelopmentAuthority GaryHeidel,ChiefP lacemakingO fficer JamesE.T ischler,AICP ,PCP ,DirectorofComm unityDev. JulieGardner,CommunityDevelopmentS pecialist DianeKarkau,Comm unityDevelopmentS pecialist BryanR obb,StatewideP artnerships/T A S pecialist DavidAllen,PhD,ChiefM arketAnalyst TMA N orthwestM ichiganCouncilofGovernments T eam L arryC.Inman ChairmanoftheBoard S arahL ucas,AICP R egionalPlanner ConsultantT eam S haronM .W oods,M A,CR E P reparedfor: T M A T eamL eader,ProjectM anager P rincipal,LandU se|U S A N athanL ong,PhD T M A Consultant R yanE.Griffith,M A,CFM T M A Consultant P reparedby: Market Strategy Report Page Executive Summary 1 TOC Market Potential 4 Regional Comparisons 13-14 Prepared for: Contact Information 15 Prepared by: NW Michigan Prosperity Region TMA Executive Summary – Charlevoix County Executive Summary This Executive Summary of the Target Market Analysis for Charlevoix County has been prepared as part of a regional study completed for 10 counties comprising the Northwest Michigan Prosperity Region (Region 2). The more complete narrative report begins on page 4 of this report, and includes a more complete explanation of the Place Scores; market potential for both aggressive and conservative scenarios; and housing affordability. The Market Potential and Strategy The Study Areas –There are 11,282 households in Charlevoix County as of month-end June 2014. Of these, 14.7% are located in Boyne City; 11.3% are in Charlevoix; 8.6% are in East Jordan; 2.8% are in Bay Shore; and smaller shares are residing in other small urban places and throughout the surrounding rural areas. A total of 44.9% of all households in the county are located in one of the 11 communities. Place Scores and Walk Scores – The City of Boyne City has a good overall Place Score with 24 points out of 30 points possible. Charlevoix and East Jordan also have good overall scores, and the Village of Boyne Falls has a good score after adjusting for its relatively small size. Propensity to Move – Among the 11,282 households currently residing in Charlevoix County, 220 of the owner households and 582 of the renter households moved in the past year. These figures include households that moved within Charlevoix County, plus households that moved into the county from beyond. The Target Markets – There are 3,144 existing households in Charlevoix County that align with the 12 target markets (i.e., household lifestyle clusters), and they represent about 28% of the county’s total households. Among 12 selected target markets, 94 of the owner households and 498 of the renter households moved in the past year. Aggressive Scenario – There is a maximum annual market potential throughout Charlevoix County for 94 new owner-occupied units and 498 new renter-occupied units, for a total of 592 units. Assuming the market potential is fully served every year over the next five years, this implies a market potential for 2,960 units over the 5-year term. Again, the aggressive scenario includes households migrating into the county, plus households moving within the same county. Market Potential by Community – Most of the market potential is in Boyne City, Charlevoix, and East Jordan, with smaller market potentials for the communities. If these communities do not act to capture their full market potential in any given year, then the smaller communities could pursue an aggressive scenario and grab a share of the market before it dissipates. 1 | P a g e NW Michigan Prosperity Region TMA Executive Summary – Charlevoix County Conservative Scenario – Under the conservative scenario there is an annual market potential for at least 49 new owner-occupied units and 225 new renter-occupied units throughout Charlevoix County, for a total of at least 274 units. Assuming the market potential is fully met every year over the next five years, this implies a market potential for at least 1,370 units over the full 5-year term. Again, the conservative scenario is based on in-migration only, and does not include internal movers. Owner-Occupied Units – Under the conservative scenario there is an annual market potential for at least 49 new owner-occupied units throughout Charlevoix County, or a cumulative of 245 units over the next five years. The aggressive scenario or maximum market potential is about 52% larger than these figures, and includes internal migration within the county as well as in-migration from beyond. Owner-Occupied Values – Almost all of the target markets will seek home values of $250,000 or less in 2012 dollars, which will be closer to $270,000 by 2015, and will approach $300,000 by the year 2020. Renter-Occupied Units – The conservative scenario generates a market potential for at least 225 renter-occupied units throughout Charlevoix County each year, or a cumulative total of 1,125 units over the 5-year term (assuming that the potential is fully captured in each consecutive year). The aggressive scenario or maximum market potential is 45% larger and includes internal migration as well as in-migration. Renter-Occupied Prices – Almost all of the target markets will seek monthly contract rents of $900 or less in 2012 dollars. These prices will be closer to $1,000 by 2015, and $1,150 by the year 2020. Similarly, almost two-thirds of the new households will be seeking contract rents of $600 or less in 2012 dollars, and these prices will be closer to $650 or less by 2015; and $750 or less by the year 2020. The remaining one-third of the county’s new households will have a tolerance for contract rents in the range of $600 to $1,250 (in 2012 dollars). HUD Affordability Standards – Based on the HUD income limits and annual market potential by contract rent bracket, only 6% (15 units) of the 225 new rental units can be priced at market rates and above; and the vast majority or 94% (210 units) should be priced in more affordable ranges. Detached Building Formats – Among the annual market potential of 274 owner-occupied and renter-occupied units, almost 38% of the new households will seek detached houses. Among new-builds, detached houses may include cottages with small footprints and lots, perhaps arranged around a shared courtyard. Detached houses could also be re-introduced by rehabilitating some of the existing stock within the urban neighborhoods. Attached Building Formats – About 61% of the target markets moving into Charlevoix County are likely to seek attached units (i.e., not detached houses) in a range of building sizes. Under the conservative scenario, there is a county-wide market potential for at least 168 attached units annually, or a cumulative of 840 attached units over the 5-year term. 2 | P a g e NW Michigan Prosperity Region TMA Executive Summary – Charlevoix County A Focus on Product Types – Strategy recommendations by product type should be refined by the developers and builders as needed for local context and place, with the urban transect as a general guide. Attached units may include a mix of duplexes, triplexes, quads, condos or row houses (no more than 6 units in a row, with private entrances), and stacked flats or lofts (no more than 6 units along the side of any given building, with shared entrances). Downtown Formats – Units above street-front retail and/or located in downtown districts will be well-received by the target markets. In transitional areas around the downtowns, low-rise buildings and row houses might be more appropriate. Detached houses, duplexes, and triplexes could be used as infill within the surrounding neighborhoods. Unit Sizes and Amenities – In the individual units, some of the floor area can be traded for unique amenities, quality construction, and modern interior treatments. However, every bedroom must have a full private bath, and 2-bedroom units must have a ½ bath near the entrance. Ideally, kitchens will be centrally located and facing outward onto an open floor plan, with bedrooms on opposite ends (i.e., not sharing common walls.) All units should have balconies or patios that can accommodate at least two chairs. Construction Costs – The average detached house built in Charlevoix County since 2010 has involved an investment in the range of $215,000 to $300,000. The assessment of construction costs for detached houses reinforces the need for a) building smaller houses (such as cottages) with small footprints as part of urban infill; b) building attached units (like lofts, flats, condos, and row houses); and c) rehabilitating the existing housing stock. 3 | P a g e NW Michigan Prosperity Region TMA Strategy Report – Charlevoix County Placemaking Summary of Placemaking Criteria – Placemaking is addressed early in this report because it is a key ingredient to implementing the optimal market strategy and achieving the market’s full potential under the aggressive scenario. In the absence of effective Placemaking, the market potential will be more limited and could even be as low as the conservative scenario. We evaluated existing Placemaking in Charlevoix County by scoring each of four (4) communities based on 30 possible attributes, and also compared each community’s Walk Score. Results in Table 1 below include Emmet and Antrim County for comparisons to Charlevoix County. Table 1 Summary of Place Scores and Walk Scores Charlevoix, Emmet, and Antrim Counties, Michigan Charlevoix County, Michigan 2010 Place Score Walk Score Small and Large Urban Places